Technological progress cannot be stopped. Just 9 years ago was launched the very first blockchain project that captured the minds of millions. After just 4 years, humanity began to think about the implementation of smart contracts, and today they are already helping to make transactions around the world.
Smart contracts… technologies that exist in the abstract blockchain and have almost no application in the real world. Why are they good if you’re an entrepreneur, but not a cyborg living in a blockchain?
Trust. This word is so ingrained in our minds that we have become slaves of our own beliefs. We trust our child’s nanny, relying on their honesty. We trust the car owner, buying a used vehicle from the auction. Trust is the engine of human relations.
What would the world look like without this universally recognized feeling? Would we return to the stone age or make a huge leap forward in the technological progress?
We will reveal the mechanism of the situation we took a look at in the previous article. Alex buys photographic equipment in the online store. Trust is the key element of this deal. Alex transfers his money to the seller, trusting him and hoping for his honesty. The further fate of the photographer is in the hands of the seller — he can either send the goods, or simply can take the money, blacklist the buyer and not respond to his complaints. Cunning and powerful wins, as well as two million years ago.
Now consider the same situation with the smart contract. The buyer shall credit the funds to the address of the contract, and the seller supplies the parcel with a GPS-tracker. The transaction is made when the location of the parcel and the buyer are the same, and the latter puts his electronic signature. Funds go to the seller, and our buyer unpacks the parcel at home.
If the parcel did not reach the destination, conditions of the smart-contract are not fulfilled: the parcel has not reached the buyer, he did not put his signature. The money is returned to the owner, or a dispute is opened — the situation is brought to the decision of an independent decentralized commission or a guarantor. What are the benefits for both sides? Both buyer and seller are confident in fulfilling each other’s obligations.
What is special in this situation?
A clear algorithm is alien to the concept of “trust”, it is guided only by the code. If there is no trust, there is no deception — that’s what the concept of trustless looks like.
Here are a couple of examples that reveal this concept:
Trader Martin plays on a centralized cryptoexchange — buys cryptocurrency lower and sells higher. He relies only on himself and does not depend on anyone. At least, this wolf of Wall street thinks so about himself and does not suspect that his main enemy is not the asset fluctuations, but centralization. Trader believes that the exchange will not freeze his funds. But what can prevent it from depriving Martin of the opportunity to earn?
Why take a chance when there are decentralised exchanges where participants do not need to trust anyone?
The deal involves two traders, everything is simple — trader A lists one cryptocurrency to the address of the smart contract, and trader B — the other. Transaction occurs when both parties have fulfilled the terms of the contract. Safety, simplicity and no additional fees.
Another situation — you and your friends are getting ready to watch the match of your favorite team and decide to bet. There are lots of similar services on the Internet, but whom to trust? No one, actually, this is the beauty of smart contracts. If you help him and provide with the information from the real world — to give access to the account of a sports match — smart contract will automatically transfer the funds to the one who bet on the winning team. You can not fear that you will lose money. Of course, if the team does not fail :)
Smart contracts make the process of human interaction easier and more reliable. They help business to reach a completely new level. They should
not be afraid and associate only with large-scale projects-now they can be used to make everyday transactions without fear for their savings.
The time when centralization was a necessary link is in the past. The tools of cybercriminals have grown so much over the past decade that now a gullible user can easily lose his money. Trust is a necessary link in people’s relationships, but when it comes to business, it only increases the level of risk.